Source: Reventure.app

If you’re thinking about diving into the world of rental property investment, you might be torn between two of Tennessee’s hottest cities: Memphis and Nashville. Both have their perks, but when you dig into the numbers, Memphis stands out as the prime choice. Here’s why Memphis Investment Properties should be at the top of your Turnkey Real Estate list.

The Scoop on Inventory and Market Dynamics

Let’s start with the basics. The inventory in Memphis is tight at just 1% of houses, compared to Nashville’s 1.3%. Less inventory means more competition among buyers, which is a good thing for investors—it can help keep property values strong and rents climbing.

Home Value Growth and Appreciation

Many people are shocked when they find out that Memphis home values have increased more than Nashville over the last 5 years. Memphis homes have appreciated 54.3% when Nashville homes have gone up 53.9%. Both are clearly very close however when coupled with the increased cash flow of Memphis, investors are able to receive a higher total ROI in Memphis.

Cash Flow and Cap Rates

The cap rate, or capitalization rate, tells you what kind of cash flow you can expect on your investment if you pay all cash. In Memphis, the average single-family (SF) cap rate is an impressive 6.7%, compared to Nashville’s 4.9%. This higher cap rate in Memphis means better cash flow, allowing you to create a passive income stream that can create mailbox money for years to come.

When financing is involved, Nashville properties are negative cash flow due to the cap rate being below the cost of debt. The huge pro of Memphis is almost all properties in town are cash flow positive, even our A class new construction homes.

Income: The Real Deal

Let’s talk about money. The median income in Memphis is $67,899, which is lower than Nashville’s $84,900. However, Memphis has seen a whopping 23.7% income growth over the past five years, outpacing Nashville’s 20.8%. More income growth means more people with money to spend on rent, which is exactly what you want as a property investor.

Home Ownership and Rent Growth: Show Me the Money

When it comes to home ownership, Memphis and Nashville are pretty close—60.8% in Memphis versus 64.9% in Nashville. But here’s where it gets exciting: rent growth in Memphis is 2.41%, compared to just 0.72% in Nashville. Higher rent growth means you can expect your rental income to increase more in Memphis, boosting your cash flow.

Barriers to Entry

Having enough capital to acquire a single family rental property is a major hurdle for new investors. If you wanted to buy a property in Nashville an investor would have to spend on average $446,179 in Nashville versus $242,519 in Memphis. With a lower barrier of entry in Memphis allows investors to acquire multiple properties which reduces your overall risk. The motto in Tennessee is investors missed the boat to invest in Nashville for cash flow as that was the place to invest 10+ years ago. 

Business Investments 

Memphis is home to Ford’s Blue Oval City, the largest investment in the history of the state of Tennessee. This investment will produce 5.6Billion and 6,000 direct and 24,000 indirect jobs for western Tennessee. More jobs bring in more income and thus higher rents and home values for our investors.

The Bottom Line: Memphis is Calling

Nashville might get a lot of attention, but Memphis is the real star for rental property investors. With more price appreciation, strong income growth, higher rent growth, more cash flow, lower barrier of entry, and very pro business. Memphis offers a low risk alternative investment that cash flows and appreciates for people looking to diversify from the stock market. 

So, if you’re ready to make a smart move and maximize your investment potential, it’s time to look to Memphis. 

The next step would be to join our buyers list where you get access to off market Turnkey rentals. 

 

Click HERE to join our buyers list and receive a FREE Turnkey Starter Pack to get you started building a portfolio in Memphis.

Click HERE to speak with our head of sales to see if we are a good fit for each other